Daily Brief For April 22, 2021

Daily commentary for U.S. broad market indices.

Market Commentary

Index futures resolve directionally, yesterday. Base overnight.

  • Growth warning, economic data.
  • ECB decision, claims, and more.
  • Sellers have trouble dominating.

What Happened: U.S. stock index futures broke their downtrend, yesterday, and auctioned sideways overnight, ahead of announcements by the European Central Bank, data on initial claims, home sales, and manufacturing, as well as earnings releases.

What To Expect: Thursday’s regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity. 

Adding, during the prior day’s regular trade, the best case outcome occurred, evidenced by initiative trade above the $4,155.00 high volume area (HVNode). This is significant due to the fact that the downtrend broke after participants lacked the conviction to move prices lower, evidenced via a poor, minimal excess low. 

Volume Areas: A structurally sound market will build on past areas of high volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test). If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.

Short-term sellers, simply put, piled on at the low and weren’t paid quickly for their risk. This inventory was resolved during Wednesday’s trend-day higher. 

Looking beyond the equity indices, breadth is pegged at its high. In the U.S., according to The Market Ear, the percent of stocks above their 200-day moving average hit 96%, the highest since 2009. Typically, after such instances, one- to three-month returns are positive.

Beyond big-picture narratives, for today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,153.50 spike base targets the point of control (POC) near $4,171.00. Initiative trade beyond the POC could reach as high as (1) the $4,183.00 regular trade high (RTH High) and (2) Fibonacci-derived price targets near $4,187.00-$4,197.25.

In the worst case, the S&P 500 trades sideways or lower; activity below the $4,117.75 regular trade low targets first the $4,110.50 poor, minimal excess low. Thereafter, if lower, participants can look for responses at (1) the $4,093.00 VPOC, (2) $4,082.75 HVNode, and (3) the $4069.25 HVNode. 

Spikes: Spike’s mark the beginning of a break from value. Spikes higher (lower) are validated by trade at or above (below) the spike base (i.e., the origin of the spike).

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.
Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 21. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as high as $422, which corresponds with $4,220.00 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: Noticeable increase in call-side interest on the cash-settled Nasdaq-100 Index (INDEX: NDX), expiring 4/28. Such activity suggests (1) an expectation, by participants, of a rotation back into technology, or (2) a hedge against earnings surprises, and the like. Visual via SHIFT.
Graphic: Market liquidity in the Invesco QQQ Trust (NASDAQ: QQQ), one of the largest ETFs that track Nasdaq-100 prices, supports price rise.

News And Analysis

Economy | U.S. jobless claims plunged last week to a pandemic low. (BBG)

Politics | President Biden plans to cut U.S. greenhouse gas emissions. (BBG)

Markets | Credit Suisse Group raises $2B as CEO cuts hedge fund unit. (BBG)

Markets | Southwest Airlines bookings improve, will likely break even. (CNBC)

Economy | Should investors worry about a Chinese Lehman-style crisis? (BBG)

Markets | Bank of Canada signals rake hike, tapers bond purchases. (REU)

Economy | Fiscal stimulus, improving employment supports bank assets. (Moody’s)

Economy | Mortgage applications broke a six-week slump, last week. (SOURCE)

Economy | U.S. economy on a solid footing, the virus still a top threat. (REU)

What People Are Saying

Innovation And Emerging Trends

FinTech | Nasdaq democratizes information, fuels on-demand finance trend. (BZ)

Startups | Investors, executives, and founders discuss Zagreb’s startup potential. (TC)

FinTech | Why VCs are investing in non-fungible token (NFT) marketplaces? (CBN)

Investing | How can you build a robust portfolio that outperforms for a century? (BBG)


Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.


At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

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